Jeremy Hunt may target alcohol duties in the Budget

Britons who enjoy an alcoholic beverage could be hit in the pocket by an announcement next week. The Chancellor is set to lay out a spring Budget on Wednesday, addressing a series of financial issues.

However, it is a double digit tax hike impacting alcohol which some are worried about.

Excise duties are expected to go up this year after a six month freeze, The Sun has reported.

In the UK, excise duty of spirits is 70 percent of the cost of a bottle.

This makes it the highest in all of the G7 countries, creating a hefty financial burden.

Spirits such as Scotch whisky and gin are impacted by this tax, however, they are facing a raise based on RPI inflation after August 1, according to the reports.

RPI inflation currently stands at 13.4 percent, meaning brewers and distillers are worried about their financial futures.

Many suppliers are worried about the price hikes they may have to pass on to consumers.

Some argued a double digit tax hike would only serve to further fuel high inflation.

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The Government has previously intervened on alcohol duties in the past.

In October 2021, when Rishi Sunak was Chancellor, he announced the “most radical simplification of alcohol duties for over 140 years”.

Mr Sunak said from February 2023, draught duty would be cut by five percent.

However, by September 2022, Chancellor Kwasi Kwarteng, who was only shortly in post, cancelled a planned duty rate increase.

Mr Hunt overturned Mr Kwarteng’s decision in October 2022, but then performed a surprising U-Turn.

The Chancellor said the alcohol duty freeze would be extended by six months, and is therefore set to expire on August 1.

The Scotch Whisky Association has said “what was right in December, remains right for the March Budget”, in its call for “fair taxation”.

The association has said a freeze on spirits duty in the Budget would “lift struggling hospitality businesses, support consumers, and boost UK growth, jobs and investment”.

A survey by the UK Spirits Alliance (UKSA) recently showed more than half of distillers who responded said they had already hiked prices by up to 10 percent.

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A spokesperson from the UKSA stated: “With 70 per cent of the cost of a bottle of spirits going to the Exchequer, we urge Jeremy Hunt to freeze spirits duty after August 1 to give small distillers breathing space as the Government delivers on its pledges to lower inflation and tackle high energy costs.”

Mr Hunt is expected to address various other issues within his upcoming Budget.

Yesterday, sources from Whitehall are understood to have said Mr Hunt will utilise his speech to unveil “significant” increases in pension allowances.

The pension lifetime allowance (LTA) and the annual allowance could be hiked to encourage middle-class professionals to continue to work, by allaying tax fears.

The Chancellor is also expected to deliver news on a potential rise to the state pension age, with results from a consultation set to be published by May 7 at the latest.

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